Companies spent over a trillion dollars last year on digital transformation. Of particular interest to many CFOs is the applicability of digital transformation in finance. This is because now, more than ever, finance must reduce its time spent on manual data processing. In its place, the expectation is that finance departments will spend more time on analysis and business partnering.
To successfully deliver a digital transformation, companies must pay attention to:
Having people with the right skills to digitise.
Change management and culture. This includes processes and the attitudes of staff.
Collaborating with the right vendors and partners.
Technology - i.e. digital tools.
We have had the privilege of working with many leading CFOs across Australia, UK, South Africa and the USA. While some flourish with their digital transformation ambitions others struggle. In the context of technology, the best performing CFOs tend to ask the right questions across two key categories:
Who do you want to empower with your digital transformation?
What capabilities are you looking for in your digital tools?
In this post, we will go into the detail of each of these categories and list some of the questions that the best performing CFOs tend to ask.
1. Who do you want to empower?
Who will lead digital charge for your finance organisation? IT or your finance staff? This is a vital decision that CFOs must consider. Ultimately, this will influence the outcome and ROI from any investments made.
Companies with large IT departments often choose to enhance their core applications. They extend core systems like SAP or Oracle or invest in new, IT-driven technologies like a data lakes or ETL. These solutions are often technical and rely on IT experts to implement and support.
That said, many organisations are starting to look beyond their IT department. By 2020, more than 60% of development will occur outside of IT. In particular, CFOs are looking to equip their business users with tools to build their own digital solutions. The reasons for this trend include:
Limited IT bandwidth. There is a global shortage of IT skills, leaving many IT departments overworked and understaffed.
Total cost of ownership (TCO). By making business users self-sufficient, the ongoing cost of owning and maintaining solutions can be much lower.
Agility to cope with change. The processes within finance are often subject to unexpected change. For example, due to upstream system changes or regulatory demands. By reducing the dependency on IT, the business is in a much better position to react and adapt to these changes.
Tools for 'Citizen Developers' (instead of IT) need:
To be more visual (drag-and-drop).
A more gentle and incremental learning curve.
Self-service help, education and easy access to local support.
Examples of such tools include RPA, self-service BI and finance automation platforms like SolveXia
Questions to ask:
Will the IT department or the business be the "developers" of your digital solutions?
Who are you trying to empower?
Do you need the ability to quickly react to unexpected changes? How can you ensure that you can meet this need?
2. What capabilities must your digital tools have?
Digital is a vague term. For finance, the concept of a "digital tools" can encompass the following technologies:
Cloud computing. Allowing for scalable, elastic technology to deliver services over the internet.
Process or workplace automation. This includes RPA and DPA tools as well as finance-centric platforms like SolveXia.
Advanced analytics. Tools that allow for the exploration, discovery, combining and analysis of large volumes of data.
Visualisation. Often complimenting analytics, these tools allow data and analysis to be presented graphically and in an interactive manner.
Cognitive and AI technologies. This includes the use of narrow AI to address parts of a wider process automation agenda - such as natural language processing.
Other technologies such as in-memory computing and distributed ledgers (blockchain).
CFOs must invest in tools for digital transformation in finance that align with the challenges they are looking to solve. That said, there are some harsh realities facing most finance departments:
Most of their data is trapped in legacy systems. 76% of companies say this is the case.
The fact above means that finance must aggregate and cleanse data - often using Excel.
Finance staff rely on others for their source data (as much as 62% of people).
In response to these realities, CFOs must see past the "bells and whistles" and focus on essential features when selecting tools. For example, can the tool:
Work with both modern data sources (APIs) and legacy system extracts (text/CSV, Excel, Access etc.)?
Aggregate data together - aligning column structures into a uniform set?
Map / join data - such as performing a lookup of product codes to return a full product description?
Transform and cleanse your data - such as replacing characters in a string or removing leading or trailing whitespaces.
Validate your data, extract exceptions and present those exceptions to staff for review?
Perform simple through to complex calculations - including row based (Total Cost = Cost + Tax) through to aggregations and cross-tabular pivots?
Produce information in familiar and trusted formats such as Excel, Powerpoint, Word and PDF?
Communicate with staff through email, SMS and other forms of contact?
Capture and support workflow - such as reviews and email based approvals?
Capture knowledge and document processes for audit and governance purposes?
Digital transformation in finance is undoubtably a worthwhile endeavour. One key outcome is agility - it promises to make finance more responsive. The other key benefit is that the CFO can reallocate staff to analysis and communicating insights.
That said, an alarming number of digital transformation projects fail. To succeed, CFOs must choose technologies that empower their staff to digitise. They must also ignore the "bells and whistles" and focus on technology that is capable of handling the complexities of finance work.
From our experience, finance staff need to be empowered with digital tools that enable them to solve their own problems. If you would like to learn more, please book a 30-minute introductory call with us.